Stocks Rise, Led by Techs, Banks; AT&T Skids

Stocks pushed higher Wednesday, led by techs and banks as optimism about the economic recovery gained strength and worries about the Goldman Sach charges subsided.

The Dow advanced, with Boeing, McDonald's and Cisco among the early gainers. But AT&T, Merck and Travelers weighed on the index.

The S&P 500and Nasdaq also rose, with information technology, financials and industrials leading the way on the S&P, showing that traders are back to placing their bets on the economic recovery.

On Friday, when the charges against Goldman Sachs rocked the market, investors were making safe-haven plays in gold, consumer staples and health care.

Volatility seems to have subsided as well: After pushing 20 last week, the CBOE volatility indexfell back below 16.

Morgan Stanley continued the parade of big-bank beats, swinging to a profit of 99 cents a sharein the first quarter from a net loss of 57 cents a share a year earlier amid strong trading revenue.

This came after Goldman Sachs reported its earnings doubledduring the quarter. Its stock was higher today.

But Wells Fargo skidded after the bank reported its profit fell amid a drop in mortgages.

However, this morning brought some good news on the housing front: Mortgage applications bounced back from three-month lows last week as buyers rushed to take advantage of the federal-tax credit before it expires and refinancing picked up. The average on the fixed 30-year dropped to around 5 percent.

Apple also reported its earnings doubledduring the quarter, but its stock rose as investors cheered the company's position, including news that its market share of the future customer base — college students — is on the rise.

Yahoo and Seagate Technology also beat Street estimates with their latest numbers after the bell Tuesday, but Yahoo shares tumbled as investors questioned the profitability of the firm's search business.

AT&T topped forecasts as the company added 1.9 million subscribers during the quarter but investors sold off the stock amid worried that the number of new subscribers with contracts added was nearly half of what it was a year earlierand the lowest since 2004, suggesting the market may be getting saturated.

Markets are in a "very dangerous situation" because they are over-extended, Philippe Gijsels, head of research at BNP Paribas Fortis Global, told CNBC. "I think we're very close to the end of this buying frenzy," he warned.

Investors have been buying on dips because there is still a lot of liquidity around and some have been making up for missing the rally, Gijsels added.

European markets were mixed, but technology and airline stocks were higher on the strong earnings. Asian stocks ended mostly higher, but Hong Kong and Singapore indexes fell.